The feature you are asking for is not widely requested. Actually you are the first person to ask for it. I will note down the idea, but I do not have the resources to implement it any time soon, unless you're willing to pay for the development costs.

I followed the instructions closely and repeatedly but the downloads tab is not showing up and there are no errors except the one above. The css file being referenced is there so I don't know what's going on. I appreciate any help to get this going.

Sellegance is a custom theme, thus changing the path from "default" to "sellegance" is not enough. You need to adjust the search and maybe also the replace patterns of the template file.

In your case the css file could be in place, but the exact line '<link rel="stylesheet" type="text/css" href="catalog/view/theme/sellegance/stylesheet/stylesheet.css" />' cannot be found from the header.tpl file, which means you need to adjust the search pattern.

Duplicate the parts that edit the default theme in the catalog part (should be at the end of the file).
Then adjust the path for your theme and then deal with the peculiarities of the Gentle theme. You may need to adjust the search and replace/insert patterns. See what has been done to the default theme and use the analogy.

Like Chris, I am also trying to integrate this with the Gentle theme. I can see how to modify the xml file to suit, and can get it it to output test modifications, but it seems like maybe something else is preventing my downloads tab from appearing?

It's almost as if it doesn't recognise that there are downloads to display - with this code producing nothing:

Installed everything smoothly and found a conflict with Multi-Vendor, it seems that Multi-Vendor takes over the product download tab and has downloads associated to a vendor. This i don't need. I get this error:
Fatal error: Call to undefined method ModelCatalogDownload::getLinkedProducts() in /home/jbgXXX/public_html/vqmod/vqcache/vq2-admin_controller_catalog_download.php on line 518.

Has anyone experienced this before and is there a workaround for this situation?

getLinkedProducts is added by the product_downloads.xml file.
If it is undefined, then the script either could not add it due to some error or another vqmod/extension has overridden it so that it does not exist.

Apparently the structure of your custom template differs from the default theme and you need to start tailoring the vqmod search & replace/insert patterns for the product.tpl file to deal with the structural peculiarities of your theme. As due to the very nature of a custom theme I cannot provide a universal solution. Almost every custom theme has a different way of displaying the tabs. Take a look at what changes were done to the default theme and then adjust the search & replace patterns to suit your theme. If you do not know how the vqmod script works, I kindly suggest you read about it from the vqmod wiki pages http://code.google.com/p/vqmod/
vQmod log files (vqmod/logs/*) are your friend in debugging. It will tell you where the script fails (meaning which vqmod search line it does not find in the template file), so you need to adjust that part of the script.

Should you find yourself in trouble with the changes I can offer paid installation & integration service. The quote for this service has been given on the extension settings page under the About tab information page.